The Zacks Analyst Blog Highlights: ExxonMobil, Chevron, Suncor Energy, Statoil ASA and Shutterfly

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Jun 04, 2012, 09:30 ET

CHICAGO, June 4, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include ExxonMobil Corporation (NYSE:XOM), Chevron Corp. (NYSE:CVX), Suncor Energy Inc. (NYSE:SU), Statoil ASA (NYSE:STO) and Shutterfly Inc. (Nasdaq:SFLY).

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Here are highlights from Friday's Analyst Blog:

Exxon Gets Nod for Hebron

ExxonMobil Corporation (NYSE:XOM) has won the approval from the Canada-Newfoundland and Labrador Offshore Petroleum Board related to the Hebron oil project off Newfoundland.

Hebron − located 217 miles southeast of St. John's, Newfoundland and approximately 300 feet under water − is a heavy oil field expected to hold over 700 million barrels. The approval will allow the Exxon led group to move ahead with the development of Hebron oil field offshore Newfoundland. The facility is expected to generate up to 150,000 barrels a day (BPD), which may be enhanced to tackle as much as 180,000 BPD.

The project, believed to be the fourth offshore oil project in the province, is estimated to cost around C$5 billion (US$4.85 billion) to C$7 billion in 2008. Although the field was discovered back in 1981, the developmental work was delayed for the tepid oil prices and disagreements over royalty rates with the provincial government.

Chevron Corp. (NYSE:CVX) was supposed to be the operator of the Hebron project that was reassigned to ExxonMobil in October 2008. ExxonMobil remains the operator of the project with a 36% share. The co-venturers are Chevron with a 26.7% share, Suncor Energy Inc. (NYSE:SU) with 22.7%, and Statoil ASA (NYSE:STO) with 9.7%. The provincially owned Energy Corporation of Newfoundland and Labrador holds 4.9% equity stake.

ExxonMobil reported disappointing first quarter 2012 results on lower production volume. Its quarterly production decreased more than 5% year over year. The company also expects oil and gas production to decline 3% in 2012 after a modest rise of 1% in 2011. We see ExxonMobil struggling to consistently grow production volumes over time.

However, we believe that ExxonMobil will retain its leverage to higher oil prices going forward given its significant share in the upstream business. Moreover, ExxonMobil is the best run integrated oil company in the world, given its track record of superior return on capital employed. Therefore, we advocate it as a core holding for investors seeking a defensive name with continued dividend growth.

We maintain our Neutral recommendation on ExxonMobil for the long term. The company holds a Zacks #3 Rank, which is equivalent to a Hold rating for a period of one to three months.

Shutterfly Adds Photo Software Firm

Shutterfly Inc. (Nasdaq:SFLY) recently took over an Israel-based photo software company Photoccino which develops technologies for photo ranking and analysis. The purchase consideration of the deal includes less than $5 million in cash. However, all Photoccino employees will continue to serve the new boss from their old workstation in Haifa, Israel.

We view the recent deal as strategically positive for both parties. Photoccino, which was founded in 2011, will be able to go global and operate at a greater scale. On the contrary, Shutterfly, which offers photo-related services, will be able to enhance its online photo sharing as well as photo book business through this acquisition.

Shutterfly will deploy Photoccino's advanced image-analysis to all its brands the Shutterfly, Tiny Prints, Wedding Paper Divas and Treat brands. Users will be allowed to organize their photos quickly from their large archives and create printed photo books, cards and albums.

Shutterfly is focused on growing its business through strategic partnerships with retailers and acquisitions. In March this year, Shutterfly signed an agreement to get hold of the Kodak Gallery. A year ago, this leading Internet-based social expression and personal publishing services company took over a privately held card design company Tiny Prints.

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